Good day, everyone, and welcome to the Domo Third Quarter Fiscal Year 2024 Earnings Call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the call over to Peter Lowry, Vice President, Investor Relations. Please go ahead, sir.

Good afternoon, and welcome. On the call today, we have Josh James, our Founder and CEO, and David Jolley, our Chief Financial Officer. I'll lead off with our safe harbor statement and then on to the call. Our press release was issued after the market close and is posted on the Investor Relations section of our website, where this call is also being webcast. Statements made on this call include forward-looking statements related to our business under federal securities laws. These statements are subject to a variety of risks, uncertainties, and assumptions. These include, but are not limited to, statements about future and prospects or financial projections and cash position; statements regarding the potential of our consumption-based pricing; statements about our sales team and technology, our expectations for new business opportunities, transactions and initiatives; statements regarding our channel of communications and upcoming events; statements regarding the potential of artificial intelligence and its impact on our business; and statements regarding the impact of macroeconomic and other conditions on our business. For discussion of these risks and uncertainties, please refer to documents we file with the SEC, in particular, today's press release, our most recently filed annual report on Form 10-K and our most recently filed quarterly report on Form 10-Q. These documents contain and identify important risk factors and other information that may cause our actual results to differ materially from those contained in our forward-looking statements. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Domo's performance. Other than revenue, unless otherwise stated, we will be discussing our results of operations on a non-GAAP basis. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Please refer to the tables in our earnings press release for a reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measure, which we have posted to the Investor Relations section of our website at domoinvestors.com. With that, I'll turn it over to Josh.

Thank you, Pete, and thank you everyone for joining the call today. In Q3, we were able to exceed guidance for our key top-line metrics, including revenue, subscription revenue, and billings. A highlight in the quarter is that we had our highest operating income in the history of $5 million, and our highest operating margin in history of 6%. Over the past few years, and especially the last few quarters, we have been incubating critical pivots that are finally coming together. They are clear and powerful priorities that are removing friction and strengthening our ability to deliver unmatched value to the market. Specifically, several years ago, we decided to test an idea: 'What would customers do if they had unlimited access to features for an unlimited number of users and all visualization for free?' It was a simple value prop to customers. Pay for the value you are realizing. Well, after positive feedback we decided to run an even broader pilot last year, and the pilot proved to be a smash hit. We now feel like we've reached critical mass with over 20% of our ARR on the consumption model. As we continue to look at the results from this very large sample size, we feel very confident in making the decision and saying we're going all in on consumption. By the end of next year, we expect to have the vast majority of our revenue on the consumption model. Again, we now have over 400 customers on consumption contracts, representing over 15% of our customer base and over 20% of our ARR. When customers move to consumption, we are seeing user counts growing at almost 3 times the speed of seat-based customers. And we are seeing 3 times the adoption rate on premium features like data science. We've also rolled out reporting so our customers can see in real time what their consumption patterns are. So far, even with the highest usage our customers are seeing, the feedback has been incredibly positive because customers recognize the value of that usage. As an example, it took us eight years at a fast-food chain to get an ARR of about $200,000. Now that they've converted to consumption, this company has committed to an ARR of over $550,000 over the next three years by expanding the use of Domo across the organization. One fun story to relate that has happened to me on multiple occasions over the last few months is watching how our customers react to the new model. I've seen the epiphanies go off in their eyes as they recognize and then look at people internally in the room and tell them conclusively that because they now have unlimited users, they can start looking at sunsetting all of their other BI technologies and legacy reporting tools and use Domo instead. Well, I couldn't have said it better myself. In support of our consumption strategy and to pave a completely open path to adoption, we've also launched a new freemium model. Freemium was impossible before our consumption model and gives everyone a risk-free opportunity to get in and try Domo with no obligations and no restrictions. Domo customers have access to all the Domo features with unlimited users and they can tackle any use case they want. And when they want to go bigger, they can click from within Domo to buy consumption credits and have an unlimited highway to multiply their impact on their business. This approach seamlessly aligns with our core philosophy of delivering value before requiring payment, reinforcing our commitment to providing accessible and valuable solutions to our users. We rolled out our free offering last month and will be rapidly iterating on it over the next quarter to focus on user experience and easy onboarding. We think that long term, this alters our ability to attract new customers and give them a friction-free path to move through the pipeline from free to paid usage to sharing with more users to broad use case adoption. Of course, this naturally leads to expanding credits and being ready for a long-term relationship with our sales and support organization. This new flow evolves us from having to work with cold leads to being able to talk with happy customers who already see the value of the platform and are ready to lean in more. To demonstrate the power of having a freemium model, let me share a story from two weeks ago. Our sales team had been calling a CTO prospect for over a year with no luck. One of our salespeople called the CTO on a Friday afternoon and left a message about freemium and the free credits it comes with. The CTO proceeded to sign up for a free instance, and over the weekend, multiple users connected to disparate data sources and built data flows powering over 40 reports. By Monday, the CTO was in love with the product and signed up for a three-year deal with a total contract value well into the six figures. And that was a three-day sales cycle. Our freemium product also completely changes the conversation with potential partners who have wanted to leverage our Domo Everywhere product to deliver data experiences through Domo for their own customers. In the past, if we had a customer with, say, 20,000 external end users, it would have required a major upfront investment, which often led our customer to reduce the use case to maybe just the top 5% of external customers. With freemium, however, we can give all 20,000 of those users a free instance of Domo immediately at no cost. This creates a very meaningful introduction to Domo for those end users with an obvious upgrade experience because they can experience the value and immediately expand and put more of their own data in our platform. In a consumption world, focusing on adoption through product-led growth and support programs is the critical path to success for both customers and for Domo. Increased adoption leads to happier and more successful customers, and the corollary is, of course, increased revenue. As we roll out features and training that support adoption, we've seen our customers rapidly expand their usage of our platform compared to when they were under seat-based pricing. For example, one of our largest customers had been a customer for six years. In those first six years, they had grown to 3,500 active users and 17 departments. Then, they converted to our consumption model. The growth was rapid. In just one additional year, they added 2,300 more active users and more than doubled the number of departments and use cases. This has dramatically increased the return for the customer and, of course, has strengthened our relationship in the account. In support of our shift to the consumption model, focusing on our customers' adoption of our platform brings complete alignment between us and our customers around multiplying value. It's all about opening up unlimited use cases to address a completely expanding list of customer needs. And it helps us learn more about what drives customer success. For example, which product features and functionality in our products really drive expanded usage? What of our support behaviors drive additional adoption of our products? It shifts the dynamic from trying to sell the customer more products to helping them find more ways to receive value. Now, the progress we've made with our consumption model and with our launch of freemium has dramatically altered our ability to be successful within the ecosystem and our partners. Only recently, we've changed our architecture to allow Domo to drive consumption for partners like Snowflake, AWS, and Microsoft. Before now, we've had conflict in the channel, where we sometimes drove consumption or compute away from our vendors. With the architecture changes, we now allow customers to choose to keep the data and the associated querying and processing of data with our partners. It was a substantial investment on our part, but we are very excited that this has all been reconciled. Because of these changes, we'll be making some announcements soon, describing partnerships where customers are able to retire spend by purchasing Domo through various app stores and marketplaces from major tech players. As it relates to AI, this is another area where consumption allows our customers to get in and start seeing the value of AI in their business without an upfront commitment or investment. As mentioned earlier, we've seen dramatically higher uptake in our data science offerings among our consumption customers compared to our seat-based customers, and we expect to see similar levels of adoption as we continue to expand our AI service layer and other AI offerings. The consumption model will expose many more customers to AI because they don't have to sign a contract before they start using it. This in turn, of course, drives consumption. We have several AI-related product launches lined up for the coming months that will help our customers build reports and interact with their data in a ChatGPT-like fashion. Now, to illustrate the impact of this new model that has already penetrated over 20% of our ARR, please let me share some real-life examples from some of our customers. So first, a significant new logo win with a Canadian retailer that was using competing BI solutions was having issues with silo data and with connecting to data in disparate systems. The company chose Domo for our consumption model, which made it easy for them to sunset legacy seat-based tools when they weren't sure they were getting the value that they needed. We are starting to see more and more of these cases, and it's certainly good to be the consolidator. A healthcare software company was using our Domo Everywhere solution to provide data to their medical customers. The company was adding new Domo Everywhere customers at a faster rate than expected and it was challenging under a seat-based model where they had to commit to their investment before receiving the value. Since transferring over to consumption now, our customer has tripled their contract size with us, and yes, that math works. An educational software company was debating which vendor to use for their ETL needs. They entered into an upsell contract with Domo, not only because of our ETL features, but because our consumption contract structure allowed them to predict their cost with a high level of confidence. Additionally, the company had been considering using Domo Everywhere to provide embedded analytics to thousands of their end users. Moving to a consumption model opened the door for them to test out our Domo Everywhere experience in a very cost-effective manner. And then, because of the value they've seen in the Domo platform, this customer has committed to dramatically alter the scale of their investment and agreed to a two-year six-figure ARR contract in Q3 with a significant upsell built into the second year. Is consumption driving adoption? It certainly looks like it. Another example is a financial services company that purchased Domo to consolidate data from multiple loan origination systems. The consumption model was key to their decision to go with Domo because it unlocked our data science and sandbox features, which were critical to their use case and would have been outside their budget under our seat-based model. Does access to all of Domo help customers unlock the value of the entire platform and become more committed to the entirety of our platform? I think so. A digital customer engagement platform company has been a Domo customer for a decade. The initial use case was for sales and marketing analytics. However, about a year ago, the company was considering a cancellation because they felt like they were paying too much per seat for about 350 users. What saved the account was a move to consumption with unlimited users. Using our product, they created an app, and because they have unlimited users, they were able to deploy the app company-wide, and now have over a thousand users on Domo's platform. Not only did we save an account that was going to cancel, several months after they converted to consumption, they actually committed to an increased level of consumption and upped their spend with us. Now, would we have been able to save this customer without consumption? No. And now we have an upsell. Looking outside of Q3, here's a few more examples of how consumption is changing the game for us. A healthcare analytics company, which is using several of our larger competitors, is looking to replace some business objects and other legacy providers. Consumption is allowing the company to replace the other vendors and expand Domo without the friction of a new contract discussion. Can Domo benefit from vendor consolidation? Yes, we can. Another small highlight is a digital asset company that was about to cancel because they thought we were too expensive for the number of users they had in the account on seat-based pricing. They moved to a consumption contract with unlimited users. Additionally, they agreed to triple their contract size, and then, just last week, agreed to triple it again. So, they are now close to 10 times their original size, as opposed to just recently being on the brink of canceling. Do I wish that all my customers were on consumption contracts? Yes, I do. Lastly, an insurance company that was paying us $200,000 a year moved to consumption because our seat-based model didn't allow them to expand as rapidly as they wanted to. With the initial move to consumption, they increased their contract with us by over $100,000. 15 months later, after they had been able to fully realize the value Domo can provide due to having unlimited users and functionality, they added another $200,000 annually to their contract to replace their spend with Cognos. So, in totality, I think these are some great examples of multiple customers that highlight the progress we are making as a company. Now, while we are marching toward improving the prospects of the company, we are also optimizing our costs so we can operate as efficiently as possible. To that end, we've made changes that impact approximately 7% of our workforce, as well as reductions in contractors, marketing programs, and other expenses. We are cognizant of the effect this has on people and would like to take a moment to express our gratitude to everyone for their contributions. Now, as we look to the future, I'm sure you can feel my energy around these pivots we're making and the signals we're seeing from customers and partners that resoundingly convince us that they're the right moves. Even when we were growing 30% year-over-year, I wasn't this optimistic about our future and our stability as I am now. We're quickly migrating to the consumption model. In Q4, we'll have the vast majority of our new logo customers on consumption and we will continue to encourage our existing customers to switch to consumption, resulting in the vast majority of our ARR transition to the consumption model within the next year. Freemium, our adoption programs, and our AI investments will continue to bolster our efforts in moving to consumption where customers are able to experience value and see the vision of what Domo can mean to their company before having to pay and commit to everything. All of these changes will also lead to a dramatic shift in our approach and success with partners and the broader ecosystem over the next 12 months, which should meaningfully impact our ability to generate leads efficiently. Domo is becoming a much more interesting company with prospects that excite our broader team. And with that, I'll now turn it over to David.

Thanks, Josh. I appreciate those examples. Like you, I'm excited about our key areas of focus and believe we're well positioned to take advantage of the opportunities ahead. While we aim for higher growth rates than we are currently seeing, I’m happy to report that we exceeded our billings guidance for the quarter. We achieved Q3 billings of $74.8 million, which is a year-over-year increase of 1%. Total revenue reached $79.7 million, also a year-over-year increase of 1%. Subscription revenue accounted for 89% of our total revenue and grew.

One moment, everyone, while we reconnect the speaker line. Please stand by, and do not disconnect. Once again, everyone, please stand by. Once again, everyone, we are reconnecting the speaker line. Please stand by.

All right, are we back live again? All right, very good. Sorry for the short delay. But thanks, Josh. I appreciate that and appreciate those great examples. Like you, I'm excited about our key areas of focus and believe we're well positioned to execute on the opportunities in front of us. Now, while we aspire to higher growth rates than we're currently experiencing, I'm pleased that we were able to exceed the billings guidance that we provided at the beginning of the quarter. We delivered Q3 billings of $74.8 million, a year-over-year increase of 1%. Total revenue was $79.7 million, also a year-over-year increase of 1%. Subscription revenue represented 89% of our total revenue and grew 3% year-over-year. And our ARR grew roughly in line with subscription revenue growth. In reviewing the metrics that will impact the remainder of the year, our current RPO was $230.8 million, consistent with last year. And our total RPO grew 4% to $367.2 million as of October 31. On a dollar-weighted measure, we continue to have approximately two-thirds of our customers in our multi-year contracts. Our gross retention was above 85%, and net retention was about 95%. Last quarter, we identified potential renewal challenges with several large customers. And while we and some of our customers continue to face challenging IT spending environment, in Q3, these renewals discussions played out somewhat better than expected, which did help our results. In regard to the large renewal risks that we had identified last quarter, we have saved a few of them and have not identified any beyond those that we had identified in last quarter for the fourth quarter. Moving on to margins and profitability. Our subscription gross margin was 84.8%, up 0.2 percentage points from Q3 of last year. And non-GAAP operating margin was a record high 6.3%, up 5.4 percentage points from a year ago. Our net loss was very close to breakeven at $24,000, which is our best result to date, and a big improvement from a net loss of $4.4 million a year ago. Net loss per share was $0, based on 36.3 million weighted average shares outstanding, basic and diluted. In Q3, cash used in operations was approximately $4.3 million. We capitalized approximately $2 million of software costs, resulting in a decline of our cash balance of $6.5 million from last quarter to $57.4 million. Cash flow from operations in Q3 was negatively impacted by the timing of collections on some receivables. However, we're still on track to generate positive operating cash flow for FY '24, and therefore, expect our Q4 cash flow from operations to be in the range of $3 million to $4 million. Looking forward to next year, we're committed to not only being operating cash flow positive, but we are targeting free cash flow positive for FY '25. In order to bring our cost structure in alignment with this target, we recently reduced our headcount-related expense by approximately 7% and also optimize a handful of other costs. For Q4 top-line metrics, we're guiding to a billing range of $102 million to $103 million, and expect GAAP revenue to be in the range of $79 million to $80 million. For the full year of fiscal '24, we expect billings to be in the range of $317.7 million to $318.7 million, and we expect GAAP revenue to be in the range of $317.8 million to $318.8 million, representing year-over-year growth of approximately 3%. We expect non-GAAP net loss per share, basic and diluted, of $0.05 to $0.09 for Q4. This assumes a 36.8 million weighted average shares outstanding, basic and diluted. For the full year, we expect non-GAAP net loss per share, basic and diluted, of $0.24 to $0.28. This assumes 36.1 million weighted average shares outstanding, basic and diluted. Additionally of note is the fact that we've engaged an investment bank to assist us with refinancing and extending the maturity of our outstanding debt. And at this point in the process, we have a significant level of interest from potential lenders. In conclusion, we posted better-than-expected top-line results with record profitability and believe we're making the right moves to drive long-term profitable growth.

With that, we'll open the call for questions. Thank you.

Yeah, congrats on the good numbers for the quarter, and I appreciate the examples regarding the capacity-based pricing impacts. I wanted to understand a little bit more on the risk of non-renewals. I think last quarter, you talked about four or five enterprise accounts that were in danger and that was part of the reset to the outlook for FY '24. Can you give us a little better color? Have we reached resolution on those four or five at-risk enterprise accounts?

Yes, we have reached a resolution. The good news is we were able to retain a couple of them despite some declines in sales. This provided a silver lining amid the challenges. For this quarter, while we are not on an upward trajectory right now, we feel optimistic about the next three to four quarters concerning the customers at risk. It seems we have reached the lowest point and are beginning to recover. As we noted, with regard to consumption pricing, we find ourselves as the consolidator rather than merely being affected by others. The shift to consumption has significantly altered our relationships with many customers and helped us retain several accounts. We believe that as this develops in the future, there will be numerous upsells from these accounts. In examining the cohort of customers who have renewed, we have not lost any that opted for consumption. Although this is a smaller sample size of 30 to 40, we will continue to monitor it as it grows. It is very encouraging to see that 20% of our business is currently based on consumption, and we believe we can increase that to a large majority within the next 12 months.

Okay. The other comment that you made last quarter was regarding the pipeline. And you characterized the pipeline back then as soft in all stages. I'm wondering if you could update that view on the pipeline.

It seems like we are starting to see improvement in the numbers. There are several indicators that suggest we might be turning a corner, even if it's just a slight shift. Our assessments show that things hit a low point last quarter and are beginning to improve. We hope this trend continues. We're feeling more confident about our situation and believe our relationships with customers have strengthened. We're better equipped to promote consumption, train our representatives, enhance our client service teams, and support adoption while helping customers discover new use cases. Overall, we feel much better positioned and have clearer visibility into our customers and contracts at this point.

We'll take our next question from Oliver Crookenden with JMP Securities.

Actually, it's Pat Walravens with JMP Securities. Thank you. So, Josh, I appreciate the shift to consumption, and we've noticed others making similar moves, but could you elaborate on this a bit? There are some downsides to the consumption model as well, right? What do you think is sacrificed when making this transition?

I believe if you asked everyone in the room to identify any negatives, we aren't really seeing any. The main difference in the model is that you won't be signing any seven-figure new logo deals upfront. When you start using AWS, you don't simply ask for a couple of million dollars worth. Instead, you test it out and begin spending, and if it meets your needs, you decide to commit for lower rates. We're experiencing the same trend. While we won't have as many large contracts coming in initially, they will occur as those customers expand. We have some significant customers currently signing up that, under the old model, would have resulted in contracts worth $3 million or $4 million annually. However, in the consumption model, you might sign them up for $400,000 initially, then another $500,000, eventually reaching a couple of million dollars. This process leads to the same outcomes but more efficiently and effectively. There’s less back-and-forth, and you don’t go through as many internal use cases and approvals. On the flip side, you won't see the large billing impacts until they have had time to develop. Thus, we will need to allow some time for those aspects to mature.

I think, Pat, an additional comment is that there was initially a concern about providing the entire platform and whether there would be anything left to sell later. However, by giving access to the whole platform and opening up all the seats, our focus shifts to assisting customers in addressing more of their data challenges and exploring additional use cases. As they do that, the upsell occurs quite naturally.

Okay. So, there's not a near-term hit on cash flow, like you don't get less cash upfront when you go to a consumption model? I mean, maybe not...

No. I mean still AIA... subscription.

Okay. Perfect. My second question is for Josh. Could you elaborate on the architectural change? I'd like to understand its history: what it was before, what it is now, and how it functions. Additionally, could you provide more details about the debt, including the current rate, maturity, and your options? Both of these insights would be really helpful. Thank you.

Previously, when we were excited about building our ecosystem and forming relationships with key data providers, we faced a challenge. As we entered accounts alongside their representatives, we found that customers they introduced us to would begin to shift some of their computing needs away from our partners and towards Domo. This quickly jeopardized those relationships since it affected their representatives' earnings. Consequently, we had to rethink our approach. Now, we can manage the computing aspect—where the data is stored and how it is processed—within platforms like Snowflake, AWS, or Microsoft. This allows us to retain all computing costs and credits generated through our partners. This shift fundamentally alters the dynamics, enabling us to scale from 40 or 100 users at a large Fortune 500 company to potentially 5,000 or 10,000 users when using the Domo front end. Those increased numbers mean more users running queries and generating reports on platforms like Snowflake, Databricks, Microsoft, AWS, or Google, putting us in a significantly stronger position. Additionally, we've had numerous discussions with partners who see the value we can bring. For instance, if we know a partner has 300 customers already utilizing their data, they’re eager to extend this to their other 10,000 customers. We might say this could be delivered for $840,000, at which point the partner might hesitate, needing to see value before committing. But now, instead of losing traction, we can say we can offer this to all 10,000 customers using a freemium model. We’ll create quick start guides so that as soon as they implement it, customers can log into Domo and access their data. We’ll customize dashboards and alerts, providing a seamless experience replicated for all users. The partner gets to see that for their data through Domo, and if they want broader access, we offer them a freemium account. Additionally, we let our partners know that they will share in any potential revenue. This transforms the partner's data distribution from a cost center into a profit center, and we've already seen significant progress in just the last month. We're very enthusiastic about the potential of Domo Everywhere through our freemium offering.

Great. And then, Dave, on the debt?

Our current debt was raised even before our IPO when we were heavily reliant on cash. As a result, it is quite expensive, with a cash interest component and a PIK interest component, leading to an effective interest rate exceeding 14%. This debt matures in April 2025. We are currently pursuing a refinancing effort with the help of a bank, and the cash interest rate we are looking at is just over 11%, depending on the SOFR rate. We have received positive feedback regarding future rate changes, which would significantly reduce our rate and extend our maturity date to 2029 or 2030, allowing us to manage this well ahead of maturity.

All right, terrific. Thanks to both of you.

One moment everyone, the speaker line has disconnected. One moment we reestablish the audio. Once again, everyone, please stand by. We'll establish that audio line momentarily. Please stay on the line. Once again everyone, you are on hold for the Domo, Inc. conference call. We are establishing the speaker line. Please stand by. You are now live.

All right. Sounds like Pat said thanks, we heard, and there was another question. Is the question still on?

Yes. One moment. We'll take our next question from Derrick Wood with T.D. Cowen.

Hey, guys. Thanks. This is Cole on for Derek. On the RIF that you talked about, we'd just like to get a little bit more color. Is that across sales, G&A? If you can just unpack that a bit, that'd be helpful.

Yes, it affected every department, with the majority in sales. In terms of growth, we are not where we want to be. Most of the changes were related to performance, and some involved the elimination of positions as we found a more efficient way to accomplish certain tasks. While it wasn't a large number, there were still several dozen people impacted. It was a challenging day, but I believe the company is now in a stronger position. This change won't significantly affect our ability to produce. In fact, having a smaller number of leads distributed to fewer representatives may actually benefit those who remain by ensuring they receive adequate support. Overall, I don't anticipate a substantial impact on the company, though it understandably affects those who were impacted.

Sounds good. Helpful. Just building on that too, for the reps that you still have at Domo, how is productivity trending? Any new initiatives around helping them sell consumption better would be helpful to hear about things.

We have various initiatives aimed at enhancing consumption. Recently, we held a Board meeting where we presented our consumption strategy and highlighted both the positive aspects and potential challenges. The Board's feedback was clear: we should move forward as quickly as possible without any concerns. To support our transition to consumption, we've established a new adoption group focused on our larger customers, reaching out to assist them without soliciting new contracts or approvals. Our goal is to help them explore the best uses of data science and identify opportunities within their marketing expenditures. These interactions are beneficial for both us and the customers, leading to increased user engagement and driving consumption. We are also reassessing our departments and the roles of our representatives, figuring out if their focus should be on securing new contracts or uncovering more use cases to excite customers. This approach is enjoyable for customers, makes them happier, and encourages them to spend more. Additionally, some customers currently on seat-based licenses don't have access to all features, and as we roll out new offerings, it encourages discussions around consumption. We are deeply committed to this focus. Notably, the 20% cohort of customers currently consuming from us shows better performance than any other group, and we aim to transition the entire business to this model, as it benefits everyone involved.

Appreciate the color. Thanks.

Thank you for accommodating me. I apologize if I repeat a question as I've been on multiple calls. David, considering the refinancing of the debt and the current higher interest rates, along with the cost measures you are implementing, to what degree could paying down debt be integrated into your capital allocation strategy, especially given the tight budget environment? How do you view debt repayment as a possible means to enhance equity value?

The good thing is that, even with a modest growth expectation for next year, we anticipate being free cash flow positive, which puts us in a strong position. If we can achieve some of the goals Josh mentioned regarding our shift to consumption, and if the macro environment improves, we could generate meaningful cash flow that might allow us to pay down some debt. There are usually penalties for paying down debt in the first year, so we will need to consider that. However, I believe we will be in a much better position in the following years to start reducing that debt well ahead of maturity.

I appreciate your insights. Josh, coming from the AWS conference, I've noticed that a major theme in people's data strategies is the idea of English becoming the new programming language, akin to how SQL is viewed. I'm interested in understanding how you are transitioning away from traditional business intelligence user interfaces to a generative AI approach, allowing users to retrieve insights using natural language like English.

Yeah, I mean it's terribly exciting because one of the most challenging things in business intelligence or in leveraging the data that you have in your company is just getting access to it. And the big part of getting access to it is connecting to it, all of the ETL that needs to go into it. And you're right, that's where these antiquated languages used to be a big part of it. And going forward, it is about English. And we have a bunch of stuff that we've already incorporated into our products, a bunch of AI that we've incorporated into our product, and a bunch of generative AI that we're going to be incorporating over the next few months into exploring the data, into building cards, into sharing data, having a data set and having AI suggest to you what you should look at, what format it should look like, being able to pick and choose from things that it suggests to you, fully formed reports. And so, it's going to dramatically alter the landscape. It's going to dramatically alter the interactions and the benefits that the customers get. So, we're really excited about that. We feel like we're extremely well positioned. When you look at the data that powers AI, it all depends on how organized that data is. And if your data is organized like a bunch of trash, then that's exactly what you're going to get back. When you use Domo, you actually not only organize your data, but you have a bunch of metadata about that data. And that's what helps AI really come up with great conclusions when it actually has an indication of what type of data is sitting there because in the data world it could be anything. It could be unstructured, messy data, and it might be data that's coming from another data warehouse. You actually don't know the root source of it, and so you need to be able to have the metadata around that and have data organized in a way. And that's one of the things that we really do with our customers, is help them organize that so that they can take advantage of all the different technologies and innovations that are rapidly coming out from AI. So, we feel like we're extremely well positioned for that. And that's another big part of why we want to be in the middle of consumption, because again, if you're using consumption, anything that is in our product, you can try out. It's going to cost you a buck to try it out. It's not a $50,000 commitment and you've got to buy a couple seats. It's just go and click on it, see what it does, see if it produces something that's effective. And then, if it does, of course, you're going to start using it more. And because you already know it's effective, even though you're using it more, you're getting a bill for it, you don't care because you already proved the value. So, that's just another reason why consumption is such an important part of this, where we see 2x, 3x usage of the additional features and functionality we have in our product when it's a consumption customer, because they're able to try it out and prove that it works. So, we're really excited about AI and the way it's going to impact our business, broadly speaking, and feel like we're really well positioned to take advantage of that.

Appreciate the thoughts, Josh. Thank you.

You bet. Thanks.

And that does conclude today's presentation. Thank you for your participation today, and you may now disconnect.